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  • Disk Drive Shortage Coming Due To Thailand Flooding?

    October 31, 2011 Timothy Prickett Morgan

    IBM i shops might be wishing soon that Big Blue was making its own disk drives in the Rochester, Minnesota, factory like it used to two decades ago soon. The flooding in Thailand, which is causing much tragedy and strife at the moment, is having a secondary effect of limiting supplies of disk drives.

    The monsoons in Thailand have been particularly brutal this year, and dozens of companies that make components for disk drives, as well as the disk drives themselves, relocated to Thailand many years ago to take advantage of inexpensive labor. Seagate Technology and Hitachi are presumably the main sources of disk drives for IBM’s Power Systems. (Hitachi bought IBM’s disk businesses many years ago and Seagate has been a second source supplier since IBM’s disks had some bugs back in 2001.) Western Digital and Toshiba also make disk drives in Thailand, but these two companies are mostly focused on the PC and laptop markets. About a quarter of the world’s disk drives are made in Thailand.

    As of two weeks ago, Seagate said that it was not having problems getting workers to its factories, but that the supply chain in disk drive parts was being disrupted. Last week, in a conference call with Wall Street analysts, Seagate president and CEO Steve Luczo said that while Seagate’s factories were still doing fine, it was “a serious and highly volatile situation, which has shut down component manufacturers, as well as drive assembly operations in the flooded region.”

    Component manufacturers and drive assembly operations in the region have been submerged in some cases, and in others, even if the factories are dry, people can’t get to them. Electronic component tracker iSuppli issued a report two weeks ago that said disk motor manufacturer Nidec and disk drive suspension assembly maker Hutchinson Technology were hit especially hard; Hutchinson is ramping up production in its American facilities to compensate. The supply issue is serious enough that Seagate is not giving out revenue projections for the fourth quarter. Western Digital has been hardest hit and is in the process of trying to buy the disk business from Hitachi. By the way, like Seagate, Hitachi has thus far managed to escape from the floods but is cutting back production because of problems getting the needed parts.

    When there’s increasing or steady demand on a supply that is dwindling, prices tend to rise. Which is why I think eventually there will be some upward pricing pressure on enterprise-class disk drives like those used by IBM in its Power Systems. But the prices on these units are so high compared to those used on PCs that the main effect will be a little less aggressive discounting by IBM’s channel partners and sales reps, not a formal change in list pricing for units.

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Volume 20, Number 37 -- October 31, 2011
THIS ISSUE SPONSORED BY:

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Table of Contents

  • Bang For The Buck on Power7 Gen 2 Servers
  • Palmisano Hands The IBM Reins To Rometty
  • IBM To Unchain RPG Open Access?
  • European Slowdown Puts The Profit Squeeze On Avnet
  • Best i Blog Bets: A Top 10 List
  • Disk Drive Shortage Coming Due To Thailand Flooding?
  • 100,000 And Counting in IBM i Grassroots Campaign
  • IBM Launches 40 Gigabit Ethernet Rack Switch
  • Q3 Financial Report Bumps Manhattan Associates Stock
  • What Could IBM Do Instead Of Spending $12.2 Billion On Shares?

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